A significant boost to Social Security payments has been forecasted for recipients in 2027.
"The biggest surprise is how much the estimate has increased from earlier forecasts," DisabilityGuidance.org co-founder Jackson Ruggiero told NTD. "A 3.8 percent COLA would be one of the larger increases in recent years and would show that inflation is still putting pressure on retirees' budgets."
With the predicted COLA, the average Social Security payment would increase to $2,103.41 per month compared to the current $2,026.41 per month, which is a $77 increase.
However, other analysts estimate the COLA could rise even higher to 4.7 percent.
The difference comes down to inflation over the next few months, according to experts.
“COLA estimates can vary because they rely on different forecasting models and assumptions about inflation over the remaining months in the adjustment period,” TSCL executive director Shannon Benton told NTD. “If inflation comes in higher than expected, particularly for housing, food, or energy, the final COLA could be larger.”
The Social Security Administration (SSA) uses Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W) data for July, August, and September from current and previous years to determine the next year's COLA.
The current CPI-W hovers at 4.4 percent.
Benton said that the largest contributor to the CPI-W is the increase in housing costs; however, even with a hike in Social Security monthly payments, average benefits will likely fall short of everyday expenses.
TSCL estimates that the average senior cost of living for a single person is $2,700 per month.
“Many seniors already have to skip doctor’s appointments due to costs, which costs all of us more in the long run when we swap preventative care for emergency care,” Benton said.
The Federal Reserve is scheduled to meet July 28 and 29, where the Federal Open Market Committee will determine if interest rates should either remain unchanged, rise, or fall. Their decision could be an indicator of the COLA’s direction, but both Ruggiero and Benton said a change in interest rate would have little to no impact on the inflation data used to calculate the 2027 COLA.
“Interest rate changes take time to work their way through the economy, so the August COLA projection will still be driven primarily by the latest inflation data rather than the Fed's decision,” Benton added.